Oracle President: It’s Business As Usual

A few days after Oracle laid out its strategy for newly acquired PeopleSoft,InformationWeek editors Charles Babcock, John Foley, and Stephanie Stahl chatted with Oracle president Charles Phillips about the lengthy negotiation process, industry competition, and what customers need to be thinking about next.

On his background as a financial analyst in sealing the acquisition deal after 18 months of negotiations:
“I certainly knew what questions would be asked. That’s always helpful. But we still had to have good answers. The market is the market, and you still have to make good decisions.”

On what surprised him most over the past 18 months:
“PeopleSoft’s ability to keep fighting as long as it did. I thought that was admirable; they did a good job. They got sales out of their existing customers and some new license sales.”

On what customers should do now that the Fusion strategy has been laid out:
“Our main message is that it’s business as usual. We’ll continue with the products. We’ll offer the same support. … There’s no urgency [for customers] to do anything. The products will be enhanced and evolve. … [Customers] don’t have to wonder what’s going on. We are eager to inform and communicate. If they have any doubts as to where things stand or if you have any questions, call us. It’s all about retaining customers and improving customer satisfaction. We can only be successful if those customers are entirely satisfied.”

On the future Fusion product suite:
“We’re trying to combine the functionality and the ideas, [but] we’re not meshing actual code together. We’re looking at all the assets we have across all the products and saying, ‘These are good ideas. Let’s make sure these ideas show up in the Fusion products.’ ”

On Oracle’s relationship with partners, such as IBM:
“Our relationships with all partners will probably get better as a result of this. We have a much bigger footprint in the marketplace now. Partners will have an expanded portfolio to work with. The feedback has been fantastic. [IBM and Oracle] have already been working well together, and we have an opportunity to take it to the next level. It’s in our best interest to work together more. That’s what customers want. Everyone’s interests in the partnering area are aligned at this time.

On support for WebSphere and other third-party middleware platforms:
“Our strategy with third-party middleware is to continue to certify against the major stacks. The default installation will be the Oracle infrastructure. We think we can engineer in extra value. Our strategy with third party middleware is to continue to certify against the major stacks. What we will likely install in the box, the default, will be the Oracle infrastructure, obviously, over time. We think we can engineer in extra value.”

On competitors offering special discounts and services designed to convince PeopleSoft users to switch platforms:
“This happens all the time, trying to get customers to switch. If the product is working, and you’re getting good support, it just doesn’t make a lot of sense. Making a business case to spend millions for no reason is hard to make for a CFO.”

On competition with SAP:
“NetWeaver doesn’t consistently use the latest Java 2 Enterprise Edition technologies and relies on a lot of complexity–ABAP [SAP’s fourth-generation language] and iDocs and other things that you will only see in the SAP environment. We use XML, Java, standard directories. … No other company can move to standards-based applications. SAP, as big as they are, can’t get all their applications over there. They have too much ABAP luggage to haul. We bit the bullet five or six years ago and rewrote in Java. The plumbing has been done.” On SAP’s acquisition of TomorrowNow:
“It sounds like they are worried to me. I’m not sure an acquisition of 30 people changes the direction of the market.”

On Microsoft competing in the enterprise application market:
“I’m not sure they’ll ever get there. It is a lot harder than most people think, and it’s a huge investment. That’s why you don’t see a lot of companies doing it.”

On software pricing pressure:
“Customers are professional buyers, and they negotiate with us hard. It has always been intense and I expect it to remain intense. It’s relative to volume. They understand how that works.”

On customer concerns about vendor lock-in:
“We are a long way from that in enterprise software … [companies with] 200, 300, or 400 software suppliers are systematically reducing the number [of vendors they work with]. They can’t afford these complex environments. … Ninety-six percent of our support calls are not about an Oracle product. They’re about how a third-party product works with Oracle. I think the worry over vendor lock-in is overblown compared to the worry about the cost of integration. … You don’t need to have 500 suppliers to have competition. … There is such a thing as having too much choice.”